India’s exports contracted by 1.15 per cent to USD 33 billion in August, for the first time in over 20 months, while the trade deficit more than doubled to USD 28.68 billion due to increased crude oil imports.
According to the preliminary data released by the commerce ministry on Saturday, imports rose by 37 per cent to USD 61.68 billion in August this year.
Trade deficit in August 2021 stood at USD 11.71 billion.
The previous decline in exports was recorded in November 2020 when the shipments had dipped by 8.74 per cent.
During April-August 2022-23, exports registered a growth of 17.12 per cent to USD 192.59 billion. Imports during the five-month period of this fiscal grew by 45.64 per cent to USD 317.81 billion.
Trade deficit widened to USD 125.22 billion in April-August this fiscal as against USD 53.78 billion in the same period last year.
Oil imports in August jumped by 86.44 per cent to USD 17.6 billion. However, gold imports dipped by 47.54 per cent to USD 3.51 billion, the data showed.
Briefing the media here on the data, commerce secretary B V R Subrahmanyam, however, said that the country’s overall exports during 2022-23 would comfortably cross USD 450 billion.
“In goods exports, we will be crossing USD 450 billion this fiscal, though my internal target is USD 470 billion. Services exports would reach USD 300 billion. So total will be USD 750 billion this fiscal as against USD 676 billion last fiscal,” Subrahmanyam said.
He added that order books of all exporters are full but orders are getting delayed in terms of execution, and “I think that is the uncertainty that is there”.
“What is the reason for the flat growth in exports? …To control inflation and ensure availability of certain products, we have put some restrictions like on wheat, steel and iron ore pellets, and export duties on some goods. All this collectively has led to a certain flattening of exports in these sectors,” the secretary added.
On services exports, he said that it is doing about USD 25 billion every month and now transport and travel have restored.
“Trade balance in goods and services is going to be in the range of USD 160 to USD 180 billion,” he said, adding CAD (Current Account Deficit) will be somewhere in the range of 3 per cent.
It is not bad but “we need to be careful about. We need to take measures and I am sure the government is actively engaged? We are in regular touch with the finance (ministry) to see that the trade balance doesn’t go out of control”, he added.
He said that free trade agreements with the Uk, UAE and Australia would give a further boost to exports in the coming years.
When asked about trade with China, he said exports have dipped by 35.6 per cent to USD 6.8 billion during April-August this fiscal as against USD 10.6 billion in the same period last year.
Imports rose by 28 per cent to USD 43.9 billion during the first five months as against USD 34.1 billion during April-August 2021.
He also informed that the new foreign trade policy will be released before September 30.
“It will kick in from October 1, so you will see a lot of measures coming in there,” Subrahmanyam said.
When asked whether Pakistan has approached India for imports of foodgrains due to floods there, he said: “I think the Prime Minister (Narendra Modi) has made the country’s position very clear. He has offered assistance etc. What will happen will follow the normal diplomatic and other channels.”
The import surge reflects the strong demand of the domestic economy due to robust growth and strong fundamentals of the Indian economy, he said.
In value terms, the surge in imports is due to a combination of quantity and price factors.
Rise in import values in August 2022 has been witnessed in major commodity groups such as coal, coke & briquettes (133.64 per cent to USD 4.5 billion), petroleum, crude & products (86.44 per cent to USD 17.6 billion), organic & inorganic chemicals (42.73 per cent to about USD 3 billion), vegetable oil (41.55 per cent to about USD 2 billion).
Amongst the major export products, sectors which recorded positive growth included electronic goods, rice, chemicals. Sectors which recorded negative growth in August included engineering, gems and jewellery, ready-made garments of all textiles and plastic.
Federation of Indian Export Organisations (FIEO) President A Sakthivel said that the slowdown in major economies across the world including China will further affect the overall forecast for the global growth process.
“Supply side disruptions due to Russia-Ukraine and China-Taiwan crisis and inflation plaguing almost all the economies as the purchasing power has also dwindled, affecting the off-take and thus the demand is also showing signs of slowdown,” he added.